Should You Really Be Managing Your Own Money?

female advisorCall it a shameless plug, but I couldn’t have said it better.

“Whether you need an adviser depends largely on your financial situation. Are you nearing retirement, puzzling over when to take Social Security benefits or tap your 401(k)? Call an adviser.”

Best of all, I didn’t even have to say it.  Those words are from Lindsay Gellman, writing for the Wall Street Journal. Lindsay provides guidance on when you really need an advisor, and when you can reasonably handle it on your own.

If you do use an advisor, pick one who’s fee-only

I was gratified to read that for those folks who could benefit by hiring an advisor, Gellman recommends they pick one who’s fee-only.

John Bogle, former Vanguard Group CEO and the father of low-cost index investing, agrees and says the choice is clear.

“Mr. Bogle suggests fee-only advisers, saying their interests tend to be better aligned with their clients’ than those of advisers paid in other ways, such as by commission. (Advisers paid that way usually hope to sell you a product.)”

Our firm has been a fee-only advisor from the get-go, and we’ve been preaching for years the advantages of using impartial investment counsel – free of troublesome conflicts of interest – who put your interests first. That way, you never have to worry that investment recommendations prepared for you are tainted by the promises of sales commissions paid to direct your business one way or another. A fee-only advisor works for you, and only you, and only does what he or she feels is best for you.

There are several reasons you should consider hiring an investment pro, says Gellman.

Advisers are no longer just for the rich. 

Good, customized advice often costs less than doing it yourself, and getting it wrong. Many of the clients coming through our doors have spent three times or more what we charge buying a mediocre investment product or annuity from a heavily-commissioned salesperson (and worst of all, they’re often not even aware of how much they’ve just spent for an inappropriate investment).

Last week, one client came in for a meeting and said her old broker swore he used to do her planning “for free.” I’m not quite sure how he figured that, since the commissions he earned off her in a few minutes of selling would cover our full service planning and investment management services for several years.

A real-life human advisor is often cheaper than impersonal computer-generated advice. One of the so-called “robo-advisers” profiled in Gellman’s article seems like a great deal, until you realize he charges the same amount we charge larger clients for in-person, full-service, customized advice, as opposed to his 1-800 advice.

Advisors help you eliminate emotion.

An advisor often has the perspective you lack where your own finances are concerned.

“Managing money is an emotional experience for many of us, says Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards, a financial-planning professional organization. So an unbiased third party, like a fee-only planner, can come in handy even for financially savvy clients. “You might be a brain surgeon—but would you operate on your own head?” Ms. Blayney says.”

Things aren’t getting any simpler.

As you get older, you accumulate more assets and complexities.

That’s never more true than when you are getting ready to retire.

“If ever you choose to consult a financial adviser,” says longtime personal-finance columnist Jane Bryant Quinn, that’s really the time to do so, as you sort through all the Social Security, retirement-account, and tax milestones particular to retirement. It’s important to get these right the first time, she says, since your time to recover from faulty decision-making at this stage is more limited.”

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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